Nissan has slashed its full-year profit forecast by 20% after car sales slumped in China amid anti-Japanese protests.

The Japanese carmaker now expects a net profit of 320 billion yen ($4 billion) for the year ending March 2013, down from an earlier estimate of 400 billion yen.

Nissan says car sales plunged 35% in China in September.

A territorial dispute between Japan and China over islands in the East China Sea has led consumers in China to boycott Japanese products.

Among Japanese carmakers, Nissan has been hardest hit by the anti-Japan sentiment.

Koji Endo, automotive analyst with Advanced Research Japan, said that close to 30% of Nissan’s vehicle sales come from China. By way of comparison, rival Toyota relies on China for about 10% of its global sales.

The company trimmed its 2012 China sales forecast to 1.175 million vehicles from a previous 1.35 million.

Nissan has slashed its full-year profit forecast by 20 percent after car sales slumped in China amid anti-Japanese protests

However, chief operating officer Toshiyuki Shiga said the company remains committed to China with no major changes in its long-term growth plans.

He did say, though, that it will assess future investments cautiously.

“We are gradually seeing signs of recovery [in China]. Customers are gradually coming back to dealerships,” Toshiyuki Shiga told reporters on Tuesday.

He said visitors to the company’s China dealerships were back to around 80% of pre-dispute levels, and orders were running at about 70%.

Nissan’s fortunes contrasted sharply with German carmaker BMW, which announced a record pre-tax profit of 2 billion euros ($2.5 billion) in the third quarter, thanks largely to booming sales in Asia.

The world’s largest luxury carmaker saw sales in China and Japan rise by 33% and 21.5% respectively in the nine months to the end of September.

Nissan said its setback in China was somewhat countered by growth in sales elsewhere, however, including in the US, Indonesia and India in the July-to-September quarter.

The company posted a net profit of 106 billion yen, an almost 8% rise compared with the same period last year.

Koji Endo said he remained optimistic about Nissan’s overall growth as the US market “seems to be very strong” for Nissan, and other Asian countries could also make up the shortfall in China.

“Asia is another very strong market especially in Thailand and Indonesia, Nissan seems to be aggressively investing in Thailand, so hopefully in the future, any weakness in the Chinese market can be offset by Thailand, Indonesia as well as in the US,” said Koji Endo.